Replying to a plea challenging the interest on interest for loans in a notification dated March 27, the Centre has informed the Supreme Court of its decision to waive compound interest for the six month moratorium period granted by the RBIThe waiver will apply to MSME, education loans, housing loans, consumer durable loans, credit card dues, personal loans to professionals and consumption loans all up to the limit of 2 crores.
In an earlier hearing of the case, the Supreme Court had ruled that there was no merit in not exempting interest on interest during the COVID-19 pandemic. The concerned moratorium attempting to provide relaxations to borrowers was extended for a further period of 3 months which ended on August 31st.
Benefits of the relaxation can also be claimed by those who had not availed of the moratorium. The central government shall take permission from the parliament before deciding on grants that shift the burden of the relaxation from the banks to the government